Many borrowers in their twenties and thirties are falling behind on their car loans and credit ﷺcard payments, hu༒rt by economic forces that are squeezing household budgets.

While borrowers of all ages had🌊 an uptick🐬 in delinquency in the fourth quarter of 2022, the trend was especially pronounced in younger age groups, according to a report from the Federal Reserve Bank of New York.

Of those in their thirties, 3.2% fell three months behind on credit cards and 1.2% did the same with car loans. Those in their twenties fell into 90-day delinquency at a rate of 2.9% for credit cards and 1.4% for car loans. Both exceed pre-pandemic levels.

Why Younger Borrowers Are Falling Behind

Family finances regardless of age are under pressure because of the high rate of inflatio💫n for consumer goods and the Federal Reserve’s series of interest rate hikes meant to combat it.

Those rate increases have raised borrowing costs for car loans, credit cards, and other kinds of consumer debt. The trends have hit younger borrowers harder than other age groups, according to the Fed’s research on household debt released Thursday.

🦄The budgets of younger borrowers could get stretched further when the reprieve on payments for federal student loans ends on Oct. 1, 2023, economists at the New Yor꧃k Fed said in a blog post. 

Younger borrowers with student loan debt got a second gut punch on June 30, 2023, when the U.S. 澳洲幸运5官方开奖结果体彩网:Supreme Court struck down the Biden Administration's plan to forgive up to $20,000 in student debt. The measure would h🔜ave erased some of the debts of about 40 million you🌳nger Americans.

Little Risk of Delinquency Seen

The growing number of delinquencies doesn’t pose much risk to lenders or the broader financial system because lower-balance loans are the ones mos🔴t likely to fall behi🍌nd, the Fed researchers wrote. For individuals, though, “This financial distress is real, and the delinquent marks will impact their access to credit for years to come,” they said.

The jump in delinquencies was part of a broader trend of increasing household debt shown in the Fed’s consumer credit report. Total debt rose to $16.9 trillion in the fourth quarter of 2022, setting a new record, as it has every quarter since the second half of 2020.